Marketing to Older Affluents

They control 67% of the wealth in the U.S. How can marketers appeal to this discriminating and diverse demographic?

In 1980, 15% of U.S. households had annual incomes of more than $75,000 (in 2003 adjusted dollars). Today, that figure is up to 26%, reports the Census Bureau. This means that one in every four households in the country now belong to the ranks of the mass affluent.

Smart marketers have been paying close attention to this growing and substantial demographic group, which was spawned in the 1980s -- a period of rising inequality, according to the census. Educated, idiosyncratic, and flush with discretionary income, the mass affluent defy easy characterization, according to Gallup Poll data. This series of articles explores the complex characteristics of the mass affluent and offers insights into how to market to them. This article discusses older affluents.

In the not-so-distant past, older consumers represented something of a challenge to marketers. The ingrained wisdom was that despite their substantial purchasing power, older Americans had long-standing brand preferences and loyalties, making it a waste of marketing dollars to attempt to change their buying patterns and behavior.

That myth was shattered by a 2002 study conducted by the AARP and RoperASW. The study found that members of the 45-plus demographic were just as likely as younger Americans to switch brands and try new products. Given the 2001 U.S. Census report that this market segment accounts for assets of $28 trillion -- 67% of wealth in the country -- corporate America can't afford not to sit up and take notice.

According to Gallup's operating definition of mass affluence (households earning $75,000 or more in annual income), about one in every three affluent Americans (36%) are aged 50 and older. Nationally, 41% of the U.S. adult population is 50-plus, according to Gallup research. (The July 1, 2003, U.S. Census puts this figure at 38%.) Thus, older Americans are slightly less prevalent among affluents than they are among the population at large.

Within the 50-plus segment, however, relatively few affluents fall into the traditional "senior citizens" demographic (adults 65 years and older). This is evident in the overall age distribution of affluents and non-affluents, which shows that only 8% of affluents, but 20% of non-affluents, are 65 years or older. Affluents are more likely to fall into the pre-senior citizen category (aged 50-64 years).

For marketers, the important takeaway is that older affluents are more "mature" than they are "old." If we define age groupings based on lifestyle stages, older affluents are mostly beyond the stage in which they are parenting young children, but they are still years away from considering a move into an assisted living center.

Mostly empty nesters

For this reason, in some very important respects, older affluents are more similar to young affluents than they are to older non-affluents. They lead active lifestyles, they work, they're married, and they're connected to the Internet.

They're also similar with respect to their gender balance and marital status. About 55% of older and younger affluents are men; in contrast, the majority of non-affluents are women. About four in five older affluents are married, similar to the percentage among younger affluents. Most are employed full- or part-time, although the rate is higher among younger affluents (81%) than older affluents (65%).

What older affluents lack are young children: Only 16% of older affluents have children under 18, compared with 60% of younger affluents. As a result, they're free from the time and stress pressures that come from parenthood -- themes evident among middle-aged affluents.

A life less stressed

You might assume that work is the greatest source of stress and pressure in American life. But Gallup research shows that raising children is an equally strong risk factor.

Given their empty-nester status, it stands to reason that older affluents might be more relaxed -- and Gallup's research shows this to be true: 6 in 10 older affluents say they have enough time to do the things they want in life, and only 28% report that they are frequently stressed. In contrast, only 41% of younger affluents say they have the time they need, and 4 in 10 say they are frequently stressed.

Voracious readers and practiced Web surfers

Whether it's because they have time on their hands or a generational cultural gap, older affluents are more avid book readers than are younger affluents. Those 50 and older read an average of 20 books a year, compared with 14 books read by younger affluents.

This book reading is in addition to regular Web surfing. Because most older affluents are still in the workforce, they are nearly as Internet savvy as younger affluents. In fact, there is relatively little generational difference in Internet usage among affluents -- just a five-point difference in the percentage who use the Internet daily (71% of younger affluents versus 66% of older affluents). Yet this segment is given short shrift by marketers, who tend to target their Internet-based campaigns at younger consumers.

When it comes to Internet usage, age is a much bigger factor for the non-affluent population. Among non-affluents, older adults (25%) are far less likely than younger adults (45%) to be online daily.

Healthy -- to a point

The self-reported health of older affluents is either not too great or not too bad, depending on your perspective. Only 36% say their health is excellent, but a combined 88% say it is excellent or good. So overall, most older affluents are in good health, but there is room for improvement.

While younger affluents are certainly healthier as a group than are older affluents, even the young are a long way from achieving perfect health. About half of younger affluents (49%) say their health is excellent, while a combined 95% describe it as excellent or good.

Older affluents are much more positive about their health than are older non-affluents. Only 19% of older non-affluents say they are in excellent health, and the combined response of excellent and good is just 67%.

Why Michelob Ultra sells in the mature market

The issue of weight is widely synonymous with health. Anheuser-Busch has reached out to older affluents in promoting its low-carb Michelob Ultra brand, and older affluents are a likely target for the $50 billion weight-loss industry.

More than half of all older affluents -- 56% -- admit to being overweight. This contrasts with 37% of younger affluents. But the problem appears to be the result of more than just age. Older affluents are also significantly more likely to be overweight than are older non-affluents (49%).

The reason for this weight gap isn't readily apparent. Older affluents are relatively positive about their diet: 32% say their diet is very healthy versus 22% of younger affluents. Also, the two groups are similar in their rates of dining out -- a practice that can sabotage even the most committed dieter. Both groups eat out an average of 1.6 times per week.

Still, given the slowing metabolism that comes with age, older affluents' restaurant habits could be a contributing factor to their growing waistlines. When asked how often they dined out in the previous week, only 25% said they did not eat dinner at a restaurant at all. This is similar to younger affluents (24%), but much lower than their non-affluent peers (43%). About half of older affluents ate out one or two times, while 22% ate out three or more times.

Among society's heavier drinkers

Alternatively, older affluents' weight problem could stem from happy hour, not dinner. Gallup finds that older affluents are among society's heavier drinkers. They are much more likely than older non-affluents to use alcohol: 74% vs. 49%. And they drink more often than younger affluents. When asked if they had consumed a drink in the past day -- an indicator of drinking frequency -- 45% of older affluents said they had, versus just 30% of younger affluents.

Overall, however, Gallup data suggest that younger adults may tend toward binge drinking (multiple drinks per occasion), while older affluents may simply be enjoying a nightly cocktail, something studies report can be beneficial to one's health -- though not necessarily one's waistline. (See "Americans and Alcohol: Drink, Drank, Drunk?" in the "See Also" area on this page.)

Less than a third of young affluents and young non-affluents drink frequently, but on average, they consumed four or five drinks per week. In contrast, nearly half of older affluents drink frequently, yet they still consume an average of five drinks per week. Only 18% of older affluents -- compared with 23% of younger affluents -- admit that they sometimes drink more than they should.

Active, but not enough

MayoClinic.com advises seniors that "Exercise is probably the single most important thing you can do to age successfully" and recommends striving for 30 minutes per day of exercise.

Older affluents' self-reported levels of physical activity exceed the national adult averages recorded by Gallup.
AARP The Magazine reports that as of 2002, 6.9 million of those in the 55-plus age group are members of a gym and that health clubs and fitness centers across the country have been renovating their facilities and programs to meet the needs of the mature market. Gallup's research indicates that:

One-third (33%) of older affluents, similar to 30% of all adults, say that they engage in vigorous sports or physical activities three or more times a week.

Close to two-thirds (62%) of older affluents engage in moderate sports or recreation three times a week, versus 55% of all adults.

On the other hand, only a third of older affluents (31%) get a moderate workout on a daily or near daily (five or six times a week) basis. So two-thirds should be doing more to optimize this health benefit.

Retirement blues

Affluents have few financial worries, but one that stands out is having enough money for retirement. Close to half of older affluents -- similar to the percentage of younger affluents -- say they are very or somewhat concerned about having enough money for retirement.

Doubts about the future solvency of Social Security -- and a decline in traditional pensions along with a corresponding increase in 401(k) plans -- produce very different retirement landscapes for younger versus older workers. What sources of income do older affluents who are still in the workforce expect to have in retirement? Unlike younger affluents, who are primarily planning on using personal retirement savings such as 401(k) plans and IRAs, older affluents have a diverse set of retirement income expectations, none of which particularly dominates.

A slight majority of older affluents (54%) say that personal retirement savings will be a major source of income for them, but nearly as many -- 44% -- say a work-sponsored pension will be important.

One in four plan to rely on either Social Security or individual stock or mutual fund investments.

One in five are counting on the equity in their homes.

These expectations about retirement income sources are quite different from the financial strategy envisioned by younger affluents for their retirement. But they also diverge from older non-affluents. That group is far more likely than their affluent counterparts to say that they will depend on Social Security and is much less reliant on 401(k) plans or other retirement savings.

Enjoying the good life

The "golden years" may be just that for today's aging Americans. Armed with time and money, they seem poised to embrace experiences that can enrich them in other ways -- from vacations and health clubs to wine-tasting classes. Academic courses on tape would be a perfect fit with this market. So would satellite radio. Given their concerns about retirement income, they may also be receptive to seminars or other learning opportunities in the area of financial planning.

Most of all, it's useful to remember that the aging affluent are primarily baby boomers who came of age in the 1960s. They no more want to sit home idly than do their children. So, providing products and services that match their taste for an active lifestyle and fine living could be very rewarding for marketers who are savvy enough to appeal to this discerning group.

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